Sears 2008 Annual Report Download - page 4

Virgin Islands under the Sears Parts & Repair Services and A&E Factory Service brand names.
Commercial and residential customers can obtain parts and repair services for all major brands of
products within the home appliances, lawn and garden equipment, consumer electronics, floor care
products, and heating and cooling systems categories. We also provide repair parts with supporting
instructions for “do-it-yourself” customers through our PartsDirect.com website. Smaller items for
repair can be brought into Sears Parts & Repair Centers located throughout the United States or into
many Sears full-line, hometown and outlet stores. This business also offers protection agreements,
product installation services and Kenmore and Carrier brand residential heating and cooling systems.
Home Services also includes home improvement services (primarily siding, windows, cabinet refacing,
kitchen remodeling, and carpet and upholstery cleaning) provided through Sears Home Improvement
Services.
Sears Canada
Sears Canada, a consolidated, 73%-owned subsidiary of Sears, conducts retail operations in Canada similar
to those conducted by Sears Domestic, with a greater emphasis on apparel and other softlines than in the U.S.
stores.
As of January 31, 2009, Sears Canada operated a total of 122 full-line stores, 266 specialty stores (including
48 furniture and appliance stores, 171 dealer stores operated under independent local ownership, five appliances
and mattresses stores, 30 Corbeil stores, one Lands’ End store and 11 outlet stores), 30 floor covering stores,
1,858 catalog pick-up locations and 106 travel offices. Sears Canada also conducts business over the Internet
through its website, sears.ca.
Development of the Business
The Merger provided Holdings a means for leveraging the historical strengths of Kmart and Sears with the
goal of making our products, brands and service offerings available through more locations and customer
distribution channels. Sears has a long-standing reputation for offering customers a wide variety of merchandise
and related services, with a particular emphasis on its strong proprietary brands such as Kenmore, Craftsman,
DieHard and Lands’ End. Historically, Sears conducted its business using primarily a mall-based format. At the
time of the Merger, Sears operated 874 domestic full-line stores mainly located in such on-mall locations. Kmart,
in contrast, historically used large format, off-mall locations in selling a selection of general merchandise goods.
At the time of the Merger, Kmart operated approximately 1,400 off-mall stores and sought to further improve its
operational performance by pursuing opportunities to offer customers a differentiated high-quality product
selection to distinguish itself from competitors. Prior to the Merger, Sears had been challenged for many years to
find a way to grow outside of the traditional mall setting. By merging, the combined company achieved the scale
and capabilities to compete more effectively against many of its more profitable rivals, without making high risk
investments in building new stores.
After the Merger, we initially worked to improve our operations by focusing on the basics, like markdown
disciplines and expense management. At the same time, we prioritized our resources to rebuild many of the
company’s systems and processes in an effort to become a more adaptable organization. As a continuation of this
effort, we announced during January 2008 that we would implement a new organizational structure and operating
model designed to simplify the way our business lines are managed and create greater autonomy, accountability
and focus for our business unit management teams. This model is intended to provide clarity and to optimize our
resources to operate our businesses more effectively and efficiently.
While we continue to create new systems and processes we will use to transform the organization to this
model, we believe we have also demonstrated an ability to adapt. We continue to improve our offerings to
customers, develop talent internally, and work to make Sears Holdings a company that creates lasting
relationships with customers. We believe our combination of products and services is unmatched by other retail
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